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Tag: Federal Reserve System

  • US job openings stayed high in sign of economic resilience

    US job openings stayed high in sign of economic resilience

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    WASHINGTON — U.S. job openings slipped in November but remained high, suggesting businesses are still determined to add workers, a blow to the Federal Reserve’s efforts to cool hiring and wage gains.

    There were 10.46 million job vacancies on the last day of November, down slightly from 10.51 million in October, the Labor Department said Wednesday. Openings peaked at 11.9 million in March.

    Yet the figures show there are nearly 1.8 jobs for every unemployed person, down from a peak of 2 but historically very high. Before the pandemic, there were usually more unemployed people than jobs.

    Such a high number of job openings suggests the economy is not yet in recession or close to falling into one. Typically businesses stop advertising job openings as the economy stumbles.

    And the high number of vacancies suggest the Fed will continue raising its benchmark interest rate at its coming meetings to quell inflation. Those higher rates will also raise the cost of mortgages, auto loans and other consumer and business borrowing.

    “For Fed officials, these data support the view that rates need to move higher and will need to stay high for some time, to soften labor market conditions and lower prices back to target,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, a consulting firm.

    In another key metric, the number of people quitting their job rose to 4.2 million, up from about 4 million in October. That is below a record of roughly 4.6 million quits late last year, but is still elevated. Workers typically quit a job for higher pay in new positions. When many Americans quit, it can force businesses to pay more to keep their workers.

    The Federal Reserve is closely monitoring the figures on job openings and quits for signals about the strength of the job market. More quitting suggests there are still plenty of businesses, desperate to hire, that are offering higher pay to lure workers from their current jobs.

    That runs counter to the Fed’s goal of slowing hiring and the economy in order to bring down inflation. Price gains have weakened in recent months but inflation was still high at 7.1% in November compared with a year ago.

    While more job openings are a benefit for those seeking work, Fed officials would like to see the number of openings fall. That’s because fewer openings would indicate less competition between businesses to find and keep workers, reducing pressure on them to raise wages.

    Fed Chair Jerome Powell has highlighted rising pay as a factor in keeping inflation high. Bigger paychecks enable Americans to spend more and can push companies to raise prices to offset the higher labor costs.

    The Fed has raised rates seven times this year, to a range of 4.25% to 4.5%, and hopes cool off the economy without causing a recession. But it expects its rate hikes to push unemployment to 4.6% next year, up from 3.7% now, an increase that has never occurred outside of a downturn.

    The report comes just days before the government is scheduled to release the December jobs report on Friday, which will show how many jobs were gained last month, and whether the unemployment rate rose or fell.

    Wednesday’s report — known as the Job Openings and Labor Turnover Survey — provides greater detail about the labor market.

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  • US job openings fell slightly in November yet still high

    US job openings fell slightly in November yet still high

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    WASHINGTON — U.S. job openings slipped in November but remained high suggesting businesses remain determined to add workers, a blow to the Federal Reserve’s efforts to cool hiring and wage gains.

    There were 10.46 million job vacancies on the last day of November, down slightly from 10.51 million in October, the Labor Department said Wednesday. That’s down from a peak of 11.9 million in March.

    Yet the figures show there are nearly 1.8 jobs for every unemployed person, down from a peak of 2 but historically very high. Before the pandemic, there were usually more unemployed people than jobs.

    In another key metric, the number of people quitting their job rose to 4.2 million, up from about 4 million in October. That is below record peaks of roughly 4.6 million quits late last year, but is still historically high. Workers typically quit a job for higher pay in new positions. When many Americans quit, it can force businesses to pay more to keep their workers.

    The Federal Reserve is closely monitoring the figures on job openings and quits for signals about the strength of the job market. More quitting suggests there are still plenty of businesses, desperate to hire, that are still offering higher pay to lure workers from their current jobs.

    That runs counter to the Fed’s goal of slowing hiring and the economy in order to bring down inflation. Price gains have weakened in recent months but inflation was still high at 7.1% in November compared with a year ago.

    While more job openings are a benefit for those seeking work, Fed officials would like to see the number of openings fall. That’s because fewer openings would indicate less competition between businesses to find and keep workers, reducing pressure on them to raise wages.

    The Fed has raised rates seven times this year, to a range of 4.25% to 4.5%, and hopes cool off the economy without causing a recession. But it expects its rate hikes to push unemployment to 4.6% next year, up from 3.7% now, an increase that has never occurred outside of a downturn.

    The report comes just days before the government is scheduled to release the December jobs report on Friday, which will show how many jobs were gained last month, and whether the unemployment rate rose or fell.

    Wednesday’s report — known as the Job Openings and Labor Turnover Survey — provides greater detail about the labor market, while the monthly jobs report on Friday includes the unemployment rate and the number of jobs added or lost each month.

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  • Global stock markets gain ahead of Fed update

    Global stock markets gain ahead of Fed update

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    BEIJING — Global stock markets and Wall Street futures rose Wednesday ahead of the release of notes from a Federal Reserve meeting that investors hope might show the U.S. central bank is moderating plans for more interest rate hikes to cool inflation.

    London and Frankfurt opened higher. Shanghai, Hong Kong and Seoul rose. Oil prices declined.

    Wall Street fell Tuesday in the year’s first trading day after recording its biggest annual decline in 14 years in 2022.

    Traders worry the Fed and other central banks might be willing to push the world into recession to extinguish inflation that is at multi-decade highs. They hope minutes of the Fed’s December meeting might show policymakers are reducing or delaying planned rate hikes due to signs economic activity is slowing.

    “While the Fed expects to keep rates higher for longer, markets continue to push back, betting on easier policy,” said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report. However, they said, “we do not think a pivot to rate cuts is likely this year.”

    In early trading, the FTSE 100 in London gained 0.1% to 7,563.34. The DAX in Frankfurt rose 0.8% to 14,181.67 and the CAC 40 in Paris advanced 0.4% to 6,623.89.

    On Wall Street, the future for the benchmark S&P 500 index was up 0.2%. That for the Dow Jones Industrial Average was 0.1% higher.

    On Tuesday, the S&P 500 lost 0.4% and the Dow slipped less than 0.1%. The Nasdaq composite dropped 0.8%.

    Technology stocks were among the biggest weights on the market. Apple fell 3.7%, leaving its market value below $2 trillion for the first time since March 8, 2021. Shares in the iPhone maker fell nearly 27% in 2022, their first annual decline in four years.

    In Asia, the Shanghai Composite Index gained less than 0.1% to 3,118.94 while the Nikkei 225 in Tokyo tumbled 1.5% to 25,716.86 on its first trading day of the year.

    The Hang Seng in Hong Kong rose 2.3% to 20,615.21. The Kosp in Seoul added 1.7% to 2,255.98.

    Sydney’s S&P-ASX 200 advanced 1.6% to 7,059.20. India’s Sensex gained 0.2% to 61.294.20. New Zealand advanced while Southeast Asian markets declined.

    On top of inflation, investors worry about the impact of Russia’s war against Ukraine and China’s COVID-19 outbreaks.

    The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year to cool economic activity and upward pressure on prices.

    The U.S. central bank forecasts that it will reach a range of 5% to 5.25% by the end of 2023. It isn’t calling for a rate cut before 2024.

    The U.S. government is due to release December employment figures Thursday. Those are expected to show a decline in hiring. Investors hope that will encourage the Fed to lower or delay possible rate hikes.

    The central bank’s next decision on interest rates is set for Feb. 1.

    Investors also are looking for corporate profit reports in mid-January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.

    In energy markets, benchmark U.S. crude shed 41 cents to $76.52 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.33 to $76.93 on Tuesday. Brent crude, the price basis for international oil trading, retreated 39 cents to $81.71 per barrel in London. It lost $3.81 the previous session to $82.10.

    The dollar edged down to 130.78 yen from Tuesday’s 131.03 yen. The euro advanced to $1.0572 from $1.0547.

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  • Don’t assume the interest on your savings account is keeping up with Federal Reserve rate hikes. Here’s why

    Don’t assume the interest on your savings account is keeping up with Federal Reserve rate hikes. Here’s why

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    Valentinrussanov | E+ | Getty Images

    As the Federal Reserve continues to hike interest rates, you may assume you’re earning more on the money in your savings account.

    But that may not be the case.

    related investing news

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    Carolyn McClanahan, a certified financial planner at Life Planning Partners in Jacksonville, Florida, was recently surprised when a client told her he was hardly making any interest on his cash.

    The interest rate on his Capital One account was 0.3%, far lower than the 3.3% annual percentage yield the firm is currently advertising for new savings accounts. McClanahan discovered the same situation when she checked her own Capital One account.

    “I was not happy,” McClanahan said.

    While a call to Capital One’s customer service revealed it was possible to access the higher interest rate by opening a new account, McClanahan decided it was better to move the money elsewhere.

    “I’ve been recommending Capital One for a long time, and they are now off my list,” McClanahan said.

    Capital One did not immediately respond to requests for comment.

    The Federal Reserve has raised the federal funds rate to the highest levels since 2007. While that makes borrowing more expensive for credit cards and other accounts, the expectation is that it will also push up the interest consumers can make on their cash savings.

    Some online savings accounts are touting rates as high as 4%. Some certificates of deposit, or CDs, may provide higher rates, depending on the term.

    Rates are expected to climb even higher as Federal Reserve poised to continue its hiking cycle in 2023. Bankrate.com predicts top-yielding national money market and savings accounts could climb to 5.25% by year end.

    Yet like McClanahan, others may be in for a surprise if they realize their accounts are not keeping up with those top rates.

    “Consumers need to check their accounts at least once a month to see what their accounts are earning,” said Ken Tumin, senior industry analyst at LendingTree and founder of Deposit Accounts.

    “Don’t assume it’s the latest greatest rate,” he said.

    More from Personal Finance:
    From ‘Quiet Quitting’ to ‘Loud Layoffs,’ career trends to watch in 2023
    How to use pay transparency to negotiate a better salary
    ‘This is a crisis.’ Why more workers need access to retirement savings

    Following Fed rate hikes, online savings accounts should generally be in the ballpark of the federal funds rate within about a month, according to Tumin.

    There are signs that may help consumers spot when they may get shortchanged on rates.

    Watch for changing account names, Tumin said. If a bank is touting savings offers under a new account name from when you opened your account, the terms you are subject to might not be the latest.

    If you see a new account, often you can request to be upgraded.

    “That’s an easy way to get the benefit of the higher rate,” Tumin said.

    Also be more vigilant when a bank, such as Emigrant Bank, has more than one online division, Tumin said. In September, Emigrant’s Dollar Savings Direct division was the first to offer 3% on an account, which eventually climbed to 3.5%.

    Now, however, its My Savings Direct division has the highest rate for an online account, with 4.35%, Tumin noted.

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  • Asian markets mixed ahead of Fed report, US jobs data

    Asian markets mixed ahead of Fed report, US jobs data

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    BEIJING — Asian stock markets were mixed Tuesday ahead of updates on U.S. employment amid fears of a possible global recession.

    Shanghai and Hong Kong gained. Seoul and Sydney declined. Oil prices fell.

    Coming off a year of big declines for major stock markets, traders worry the Federal Reserve and other central banks that raised interest rates last year to cool inflation might be willing to push the world into recession.

    Inflation might “remain far north of 3% by the end of 2023, simply too high for central bank comfort,” said Stephen Innes of SPI Asset Management in a report.

    The Shanghai Composite Index gained 0.2% to 3,094.12 and the Hang Seng in Hong Kong added 0.6% to 19,906.65. Japanese markets were closed for a holiday.

    Seoul’s Kospi shed 0.8% to 2,208.36 after South Korea’s 2022 exports fell 9.5% from the previous year and the country recorded its biggest trade deficit ever.

    Sydney’s S&P-ASX 200 lost 1.6% to 6,927.20 after Australian house prices fell 1.1% and an index of manufacturing activity decline.

    India’s Sensex opened up 0.5% at 61.167.79. Singapore declined while Bangkok and Jakarta advanced. New Zealand markets were closed for a holiday.

    This week’s most closely watched data point is notes from the Fed’s latest meeting due to be released Thursday. That will give traders an update on the U.S. central bank’s thinking about the possible need for more rate hikes.

    It will be followed Friday by U.S. employment data.

    Forecasters expect monthly job gains to decline in December, which they hope might encourage the Fed to dial back plans for more rate hikes. But the Fed has a “clear focus on keeping inflation under check,” which “could still leave pricing data as the key driver of market moves,” Yeap Jun Rong of IG said in a report.

    Traders also are looking ahead to corporate earnings reports in mid-January.

    Global central banks are trying to extinguish inflation that is at multi-decade highs in many countries. It has been worsened by Russia’s invasion of Ukraine, which disrupted commodity markets and caused oil and wheat prices to spike.

    U.S. financial markets were closed Monday for a holiday after Wall Street’s benchmark S&P 500 index ended 2022 down 19.4%, its biggest decline since the 2008 financial crisis. It lost $8.2 trillion in stock value, according to S&P Dow Jones Indices.

    Market benchmarks in Germany and France closed higher Monday.

    The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero after seven increases last year. The U.S. central bank forecasts it will reach a range of 5% to 5.25% by late 2023, with no rate cut before 2024.

    In energy markets, benchmark U.S. crude lost 36 cents to $79.90 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.86 on Monday to $80.26. Brent crude, the price basis for international oil trading, shed 39 cents to $85.52 per barrel in London. It added $2.45 the previous session to $85.91.

    The dollar declined to 130.17 yen from Monday’s 130.80 yen. The euro edged down to $1.0669 from $1.0700.

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  • Asian markets mixed ahead of Fed report, US jobs data

    Asian markets mixed ahead of Fed report, US jobs data

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    BEIJING — Asian stock markets were mixed Tuesday ahead of updates on U.S. employment amid fears of a possible global recession.

    Shanghai and Hong Kong gained. Seoul and Sydney declined. Oil prices fell.

    Coming off a year of big declines for major stock markets, traders worry the Federal Reserve and other central banks that have raised interest rates repeatedly to cool inflation might be willing to push the world into recession.

    Inflation might “remain far north of 3% by the end of 2023, simply too high for central bank comfort,” said Stephen Innes of SPI Asset Management in a report.

    The Shanghai Composite Index gained 0.2% to 3,094.12 and the Hang Seng in Hong Kong added 0.6% to 19,906.65. Japanese markets were closed for a holiday.

    Seoul’s Kospi shed 0.8% to 2,208.36 after South Korea’s 2022 exports fell 9.5% from the previous year and the country recorded its biggest trade deficit ever.

    Sydney’s S&P-ASX 200 lost 1.6% to 6,927.20 after Australian house prices fell 1.1% and an index of manufacturing activity decline. Singapore declined while Jakarta advanced. New Zealand markets were closed for a holiday.

    This week’s most closely watched data points are notes from the Fed’s latest meeting due to be released Thursday. That will give traders an update on the U.S. central bank’s thinking about the possible need for more rate hikes.

    It will be followed Friday by U.S. employment data.

    Forecasters expect monthly job gains to decline in December, which they hope might encourage the Fed to dial back plans for more rate hikes. But the Fed has a “clear focus on keeping inflation under check,” which “could still leave pricing data as the key driver of market moves,” Yeap Jun Rong of IG said in a report.

    Traders also are looking ahead to corporate earnings reports in mid-January.

    Global central banks are trying to extinguish inflation that is at multi-decade highs in many countries. It has been worsened by Russia’s invasion of Ukraine, which disrupted commodity markets and caused oil and wheat prices to spike.

    U.S. financial markets were closed Monday for a holiday after Wall Street’s benchmark S&P 500 index ended 2022 down 19.4%, its biggest decline since the 2008 financial crisis. It lost $8.2 trillion in stock value, according to S&P Dow Jones Indices.

    Market benchmarks in Germany and France closed higher Monday.

    The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero after seven increases last year. The U.S. central bank forecasts it will reach a range of 5% to 5.25% by late 2023, with no rate cut before 2024.

    In energy markets, benchmark U.S. crude lost 20 cents to $80.06 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.86 on Monday to $80.26. Brent crude, the price basis for international oil trading, shed 26 cents to $85.65 per barrel in London. It added $2.45 the previous session to $85.91.

    The dollar declined to 130.17 yen from Monday’s 130.80 yen. The euro edged down to $1.0667 from $1.0700.

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  • Asian markets mixed after S&P 500 ends worst year since 2008

    Asian markets mixed after S&P 500 ends worst year since 2008

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    BANGKOK — Shares began the year mixed on Monday, with most markets closed for New Year holidays.

    This week brings employment data and minutes from the latest meeting of the Federal Reserve as it battles inflation. That will likely remain investors’ overarching concern as 2023 begins with persisting uncertainties over the war in Ukraine and over whether interest rate hikes meant to tame inflation might lead to recession.

    South Korea’s Kospi fell 0.1% to 2,233.96 and the Sensex in Mumbai edged less than 0.1% higher, to 60,871.24. Jakarta’s benchmark was lower.

    The future for Germany’s DAX was down 0.5%.

    U.S. stock markets will be closed Monday in observance of the New Year’s Day holiday.

    Over the weekend, a report showed that Chinese manufacturing contracted for a third consecutive month in December, in the biggest drop since February 2020, as the country grapples with a nationwide COVID-19 surge after suddenly easing anti-epidemic measures.

    A monthly purchasing managers’ index declined to 47.0 from 48.0 in November, according to data released from the National Bureau of Statistics on Saturday. Numbers below 50 indicate a contraction in activity.

    China is in the process of removing strict COVID-19 policies that crimped production for raw materials and goods and discouraged travel. It’s uncertain what impact the reopening will have on the global economy.

    The minutes of the Fed’s meeting potentially will give investors more insight into its next moves. The government will also release its November report on job openings Wednesday. That will be followed by a weekly update on unemployment on Thursday. The closely-watched monthly employment report is due Friday.

    Wall Street is also waiting on corporate earnings reports, which will start flowing in around the middle of January. Companies have been warning investors that inflation will likely crimp their profits and revenue in 2023, even after they raised prices on everything from food to clothing to offset inflation, helping to pad their profit margins.

    On Friday, U.S. markets logged more losses in quiet trading, closing the book on the worst year for the benchmark S&P 500 since 2008.

    The S&P 500 fell 0.3% to 3,839.50. It posted a 5.9% loss for the month of December and a 19.4% decline in 2022, or 18.1%, including dividends.

    That’s just its third annual decline since the financial crisis 14 years ago and a painful reversal for investors after the S&P 500 notched a gain of nearly 27% in 2021. All told, the index lost $8.2 trillion in value, according to S&P Dow Jones Indices.

    The Dow dropped 0.2% on Friday to close at 33,147.25, down 8.8% for the year. The Nasdaq slipped 0.1% to 10,466.48, racking up an annual loss of 33.1%. The Russell 2000 shed 0.3%, ending at 1,761.25.

    Stocks struggled all year as pandemic stimulus was withdrawn and inflation put increasing pressure on consumers, raising fears that economies may slip into recession. Central banks raised interest rates to fight high prices.

    The Fed’s key lending rate stood at a range of 0% to 0.25% at the beginning of 2022 and closed the year at a range of 4.25% to 4.5% after seven increases. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    Rising interest rates prompted investors to sell the high-priced shares of technology giants such as Apple and Microsoft and other companies that flourished as the economy recovered from the pandemic.

    Amazon and Netflix lost roughly 50% of their market value. Tesla and Meta Platforms, the parent company of Facebook, each dropped more than 60%, their biggest-ever annual declines.

    Russia’s invasion of Ukraine worsened inflationary pressure earlier in the year by making oil, gas and food commodity prices even more volatile amid existing supply chain issues. Oil closed Friday around $80, about $5 higher than where it started the year. But in between oil jumped above $120, helping energy stocks post the only gain among the 11 sectors in the S&P 500, up 59%.

    In currency dealings, the U.S. dollar rose to 130.93 Japanese yen from 130.89 yen. The euro fell to $1.0697 from $1.0699.

    ———

    AP Business Writers Alex Veiga and Damian J. Troise contributed.

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  • Asian markets mixed after S&P 500 ends worst year since 2008

    Asian markets mixed after S&P 500 ends worst year since 2008

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    BANGKOK — Shares began the year mixed on Monday, with most markets closed for New Year holidays.

    This week brings employment data and minutes from the latest meeting of the Federal Reserve as it battles inflation. That will likely remain investors’ overarching concern as 2023 begins with persisting uncertainties over the war in Ukraine and over whether interest rate hikes meant to tame inflation might lead to recession.

    South Korea’s Kospi fell 0.1% to 2,233.96 and the Sensex in Mumbai edged less than 0.1% higher, to 60,871.24. Jakarta’s benchmark was lower.

    The future for Germany’s DAX was down 0.5%.

    U.S. stock markets will be closed Monday in observance of the New Year’s Day holiday.

    Over the weekend, a report showed that Chinese manufacturing contracted for a third consecutive month in December, in the biggest drop since February 2020, as the country grapples with a nationwide COVID-19 surge after suddenly easing anti-epidemic measures.

    A monthly purchasing managers’ index declined to 47.0 from 48.0 in November, according to data released from the National Bureau of Statistics on Saturday. Numbers below 50 indicate a contraction in activity.

    China is in the process of removing strict COVID-19 policies that crimped production for raw materials and goods and discouraged travel. It’s uncertain what impact the reopening will have on the global economy.

    The minutes of the Fed’s meeting potentially will give investors more insight into its next moves. The government will also release its November report on job openings Wednesday. That will be followed by a weekly update on unemployment on Thursday. The closely-watched monthly employment report is due Friday.

    Wall Street is also waiting on corporate earnings reports, which will start flowing in around the middle of January. Companies have been warning investors that inflation will likely crimp their profits and revenue in 2023, even after they raised prices on everything from food to clothing to offset inflation, helping to pad their profit margins.

    On Friday, U.S. markets logged more losses in quiet trading, closing the book on the worst year for the benchmark S&P 500 since 2008.

    The S&P 500 fell 0.3% to 3,839.50. It posted a 5.9% loss for the month of December and a 19.4% decline in 2022, or 18.1%, including dividends.

    That’s just its third annual decline since the financial crisis 14 years ago and a painful reversal for investors after the S&P 500 notched a gain of nearly 27% in 2021. All told, the index lost $8.2 trillion in value, according to S&P Dow Jones Indices.

    The Dow dropped 0.2% on Friday to close at 33,147.25, down 8.8% for the year. The Nasdaq slipped 0.1% to 10,466.48, racking up an annual loss of 33.1%. The Russell 2000 shed 0.3%, ending at 1,761.25.

    Stocks struggled all year as pandemic stimulus was withdrawn and inflation put increasing pressure on consumers, raising fears that economies may slip into recession. Central banks raised interest rates to fight high prices.

    The Fed’s key lending rate stood at a range of 0% to 0.25% at the beginning of 2022 and closed the year at a range of 4.25% to 4.5% after seven increases. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    Rising interest rates prompted investors to sell the high-priced shares of technology giants such as Apple and Microsoft and other companies that flourished as the economy recovered from the pandemic.

    Amazon and Netflix lost roughly 50% of their market value. Tesla and Meta Platforms, the parent company of Facebook, each dropped more than 60%, their biggest-ever annual declines.

    Russia’s invasion of Ukraine worsened inflationary pressure earlier in the year by making oil, gas and food commodity prices even more volatile amid existing supply chain issues. Oil closed Friday around $80, about $5 higher than where it started the year. But in between oil jumped above $120, helping energy stocks post the only gain among the 11 sectors in the S&P 500, up 59%.

    In currency dealings, the U.S. dollar rose to 130.93 Japanese yen from 130.89 yen. The euro fell to $1.0697 from $1.0699.

    ———

    AP Business Writers Alex Veiga and Damian J. Troise contributed.

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  • Pain, few gains for investors as markets slumped in 2022

    Pain, few gains for investors as markets slumped in 2022

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    Investors found few, if any, places to safely put their money in 2022, as central banks in the U.S. and around the globe raised interest rates for the first time in years to fight surging inflation, stoking fear of a global recession.

    Uncertainty about how far the Federal Reserve and other central banks would go in the fight against inflation sparked a return of volatility. Large swings in stocks were common on Wall Street as the Fed raised its key interest rate seven times and signaled more hikes to come in 2023.

    Russia’s invasion of Ukraine and China’s strict COVID-19 policies also contributed to inflation and roiled the global economy as well as markets in Asia, Europe and the U.S.

    On Wall Street, the benchmark S&P 500 index had its worst start to a year since 1970. By June, t he index fell into a bear market, a drop of more than 20% from the record high set in early January. The energy sector was the lone winner, benefitting from a spike in oil and gas prices. Technology stocks tumbled after leading the market during the pandemic.

    Borrowing money got more expensive. The 10-year Treasury yield, which influences rates on mortgages and other loans, soared, reaching 4.22% in October after starting the year at 1.51%.

    Still, climbing yields in the U.S. and abroad sent prices for older bonds already in investors’ portfolios sharply lower. The rout in bonds was particularly painful for fixed-income investors.

    Cryptocurrency investors weren’t spared either. Bitcoin shed more than half its value and a number of high-flying companies wound up in bankruptcy court.

    — Alex Veiga

    Here’s a look back on the key events in markets for 2022:

    ——

    INFLATION AND THE FED

    Inflation was the dominant global economic theme this year. Gasoline prices in the U.S. reached $5 a gallon. Companies either raised prices, or kept prices steady but put less in each package. Europe feared running short of natural gas and prices there rose more than in the U.S.

    Central banks’ response to inflation overshadowed financial markets in 2022 and could very well do so again next year. As the year began, officials at the Federal Reserve had accepted that inflation was not a temporary phenomenon. Russia’s invasion of Ukraine only made things worse by sending energy and food prices soaring.

    Still, it wasn’t until March, when the U.S. government said inflation had approached 8%, that the Fed acted — too little, too late for some pundits and economists. As the year went on the Fed got more aggressive, eventually raising rates seven times by a total of 4.25 percentage points.

    Inflation in the U.S. appears to have peaked at 9.1% in June. By year-end, there were hopeful signs as prices for goods fell and rents started declining. But tough inflation talk from the Fed at its last meeting of the year took the steam out of what had been a fourth-quarter rally for stocks.

    — Chris Rugaber

    For full coverage of the global economy, go to https://apnews.com/hub/economy

    ———

    THE BEAR ROARS

    Wall Street’s brutal year left few stocks unscathed, and the vast majority fell into a bear market under the weight of fast-rising interest rates.

    After peaking on the very first trading day of 2022, it took about six months for the S&P 500 to drop more than 20%. The biggest losers were the stocks that had performed the best in the rally that followed the coronavirus crash.

    Back then, high-growth tech stocks roared the highest thanks to the juice provided by super-low interest rates. But in the cold light of 2022, those stocks suddenly looked the most expensive and the most vulnerable as the Fed hiked interest rates to their highest level in 15 years.

    The pain did not discriminate much, though. Seven out of 10 stocks in the S&P 500 fell in 2022, as of Dec. 21. Many analysts expect more pain in early 2023 before things get better.

    — Stan Choe

    To see AP’s full coverage of the markets, go to: https://apnews.com/hub/financial-markets and https://apnews.com/hub/off-the-charts

    ———

    BOND MARKET BLUES

    It was one of the worst years in history for bond investors.

    Decades-high inflation meant the fixed payments coming from bonds in the future won’t buy as many groceries, gallons of gasoline or whatever else is rising in price.

    The Federal Reserve’s decision to raise interest rates also hammered bond prices. Because newly issued bonds were paying more in interest, the older bonds sitting in many investors’ portfolios were suddenly much less attractive because of their lower yields.

    The largest bond fund by assets, one from Vanguard that tracks the broad market, had lost 12.5% in 2022, as of Dec. 20. That’s by far its worst year since its inception in 1987.

    Historically bonds have held up better than stocks during downturns, offering some cushion for investors, but both tumbled in 2022.

    — Stan Choe

    ———

    HOUSING MARKET SLUMPS

    As 2022 began, the nation’s housing market was still running red hot.

    House hunters competed for the fewest homes for sale in more than two decades, fueling bidding wars that pushed prices sharply higher. The average rate on a 30-year mortgage was slightly above 3%, near historic lows.

    Then mortgage rates started to climb, spurred by expectations of higher interest rates as the Federal Reserve began raising its short-term lending rate in a bid to tame inflation. By October, the average rate on a 30-year home loan soared above 7%, a 20-year high.

    Higher mortgage rates combined with still-rising home prices make it difficult for many would-be buyers to afford a home. Sales of previously occupied U.S. homes saw their biggest sales slump in more than a decade.

    — Alex Veiga

    ———

    IS TESLA ON AUTOPILOT?

    You can’t blame Tesla shareholders for feeling jilted.

    CEO Elon Musk took over Twitter and appears consumed with turning around the social media company. With Musk’s focus diverted, Tesla shares have lost more than half their value. And Tesla’s dominance of the market for electric vehicles is waning.

    Most of Musk’s wealth is tied up in Tesla stock, which started falling in April when he disclosed a stake in Twitter. The collapse in the stock price has bumped Musk into second place on Forbes’ list of the world’s wealthiest people, behind cosmetic magnate Bernard Arnault.

    After buying Twitter in October, Musk has cut half its staff and picked fights with public officials and others.

    — Tom Krisher

    For full coverage of Elon Musk, Twitter and Tesla, go to https://apnews.com/hub/twitter-inc

    ———

    CONSUMERS FEEL THE PINCH

    The highest inflation in four decades is hitting consumers right in their wallets.

    Households — especially at the lower end of the income spectrum — are likely depleting savings built up during the pandemic, with more pain to come should the economy tip into a recession. Credit card debt ballooned and rents rose in 2022, although there are signs housing costs will be coming down. While President Biden promised student borrowers relief of up to $20,000 this year, that debt cancellation policy is tied up in the courts.

    Wages went up, although not at the same pace as inflation. Aggressive rate hikes by the Federal Reserve have pushed up the cost of borrowing money. But while the average rate on a credit card rose to 16.3% in August from 14.5% at the start of the year, according to the government, the average rate for a savings account is still just 0.2%; it’s 0.9% for a one-year CD.

    — Cora Lewis

    For full coverage personal finance got to https://apnews.com/hub/financial-wellness and https://apnews.com/hub/personal-finance

    ——

    UKRAINE WAR IMPACT

    Russia’s invasion of Ukraine in February sent prices soaring for the commodities the world runs on: oil, natural gas, and wheat.

    European prices for natural gas rose to 17 times their prewar levels after Russia choked off most supplies over the war. The result was an energy crisis that pushed inflation to record levels and left governments and utilities scrambling to find alternative supplies of gas ahead of winter heating season.

    Global oil prices spiked as Western buyers shunned Moscow’s crude, sending Brent to over $120 per barrel in May. Europe banned most Russian oil imports in December and the Group of Seven democracies imposed a $60 per barrel price cap on Russian exports.

    Meanwhile record wheat prices spurred disastrous food inflation in poor countries.

    By year end, lower prices for oil, natural gas and electricity had provided a bit of relief for drivers and homeowners.

    To see full coverage of the Russia-Ukraine war, go to https://apnews.com/hub/russia-ukraine

    ———

    CHINA DITCHES ZERO COVID

    China’s economic growth and stock market slid in 2022 under pressure from pandemic controls and corporate debt, prompting the ruling Communist Party to ease off anti-disease restrictions and try to revive a struggling real estate industry.

    The world’s second-largest economy shrank by 2.6% in the three months ending in June compared with the previous quarter after Shanghai and other industrial centers shut down for up to two months to fight outbreaks.

    Forecasters say annual growth might fall below 3%, among the lowest in decades. To cut the economic drag, the ruling party ended testing for millions of people and stopped requiring supermarkets and other businesses to track the health of employees and customers. Beijing also tried to revive real estate, China’s biggest economic driver, by lending more to apartment buyers while trying to prevent a renewed rise in borrowing by developers.

    — Joe McDonald

    To see full coverage of developments in China, go to https://apnews.com/hub/china

    ———

    CRYPTO’S WILD RIDE

    The year began with bitcoin above $45,000 and the crypto industry making further inroads among politicians and mainstream financial institutions. As 2022 ends, bitcoin is below $17,000, the industry’s “savior” is in jail and Washington is fighting over how to regulate crypto.

    With the steady, steep decline of crypto prices in the background, the dominoes began to fall with the collapse in May of Terra, a so-called stablecoin. Investors lost tens of billions of dollars and a number of crypto companies faced financial ruin. In stepped Sam Bankman-Fried, the young founder of crypto exchange FTX, who bailed out crypto lender BlockFi and crypto firm Voyager, earning him comparisons to the original J.P. Morgan.

    Those plaudits evaporated when FTX unraveled in November. Questions about its financial strength prompted customers to request large withdrawals. Overwhelmed and, it turns out, underfunded, FTX filed Chapter 11 bankruptcy protection on Nov. 11. Bankman-Fried was arrested in the Bahamas and U.S. prosecutors hit him with an eight-count indictment.

    — Ken Sweet

    To see AP’s full coverage of the cryptocurrency industry, go to: https://apnews.com/hub/cryptocurrency

    ——

    THE STREAMING WARS

    Netflix, Warner Bros. Discovery and other big entertainment companies tumbled in 2022 as streaming services struggled amid increased competition and rising inflation stifled advertising spending.

    Streaming services had to contend with a return to normal for many people who had been stuck at home because of lockdowns or other restrictions during the height of the COVID-19 pandemic. The sheer number of streaming options also left companies in a fierce fight for viewers’ attention.

    Streaming giant Netflix lost about half of its value after a steep drop in viewers in the year’s first half. Disney felt the pinch from lower advertising revenue, but the diversified entertainment giant’s stock held up better than most competitors.

    Warner Bros. Discovery also struggled with advertising revenue, and it axed several films including “Batgirl” as it shifted strategy and looked to trim costs.

    — Damian Troise

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  • Pain, few gains for investors as markets slumped in 2022

    Pain, few gains for investors as markets slumped in 2022

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    Investors found few, if any, places to safely put their money in 2022, as central banks in the U.S. and around the globe raised interest rates for the first time in years to fight surging inflation, stoking fear of a global recession.

    Uncertainty about how far the Federal Reserve and other central banks would go in the fight against inflation sparked a return of volatility. Large swings in stocks were common on Wall Street as the Fed raised its key interest rate seven times and signaled more hikes to come in 2023.

    Russia’s invasion of Ukraine and China’s strict COVID-19 policies also contributed to inflation and roiled the global economy as well as markets in Asia, Europe and the U.S.

    On Wall Street, the benchmark S&P 500 index had its worst start to a year since 1970. By June, t he index fell into a bear market, a drop of more than 20% from the record high set in early January. The energy sector was the lone winner, benefitting from a spike in oil and gas prices. Technology stocks tumbled after leading the market during the pandemic.

    Borrowing money got more expensive. The 10-year Treasury yield, which influences rates on mortgages and other loans, soared, reaching 4.22% in October after starting the year at 1.51%.

    Still, climbing yields in the U.S. and abroad sent prices for older bonds already in investors’ portfolios sharply lower. The rout in bonds was particularly painful for fixed-income investors.

    Cryptocurrency investors weren’t spared either. Bitcoin shed more than half its value and a number of high-flying companies wound up in bankruptcy court.

    — Alex Veiga

    Here’s a look back on the key events in markets for 2022:

    ——

    INFLATION AND THE FED

    Inflation was the dominant global economic theme this year. Gasoline prices in the U.S. reached $5 a gallon. Companies either raised prices, or kept prices steady but put less in each package. Europe feared running short of natural gas and prices there rose more than in the U.S.

    Central banks’ response to inflation overshadowed financial markets in 2022 and could very well do so again next year. As the year began, officials at the Federal Reserve had accepted that inflation was not a temporary phenomenon. Russia’s invasion of Ukraine only made things worse by sending energy and food prices soaring.

    Still, it wasn’t until March, when the U.S. government said inflation had approached 8%, that the Fed acted — too little, too late for some pundits and economists. As the year went on the Fed got more aggressive, eventually raising rates seven times by a total of 4.25 percentage points.

    Inflation in the U.S. appears to have peaked at 9.1% in June. By year-end, there were hopeful signs as prices for goods fell and rents started declining. But tough inflation talk from the Fed at its last meeting of the year took the steam out of what had been a fourth-quarter rally for stocks.

    — Chris Rugaber

    For full coverage of the global economy, go to https://apnews.com/hub/economy

    ———

    THE BEAR ROARS

    Wall Street’s brutal year left few stocks unscathed, and the vast majority fell into a bear market under the weight of fast-rising interest rates.

    After peaking on the very first trading day of 2022, it took about six months for the S&P 500 to drop more than 20%. The biggest losers were the stocks that had performed the best in the rally that followed the coronavirus crash.

    Back then, high-growth tech stocks roared the highest thanks to the juice provided by super-low interest rates. But in the cold light of 2022, those stocks suddenly looked the most expensive and the most vulnerable as the Fed hiked interest rates to their highest level in 15 years.

    The pain did not discriminate much, though. Seven out of 10 stocks in the S&P 500 fell in 2022, as of Dec. 21. Many analysts expect more pain in early 2023 before things get better.

    — Stan Choe

    To see AP’s full coverage of the markets, go to: https://apnews.com/hub/financial-markets and https://apnews.com/hub/off-the-charts

    ———

    BOND MARKET BLUES

    It was one of the worst years in history for bond investors.

    Decades-high inflation meant the fixed payments coming from bonds in the future won’t buy as many groceries, gallons of gasoline or whatever else is rising in price.

    The Federal Reserve’s decision to raise interest rates also hammered bond prices. Because newly issued bonds were paying more in interest, the older bonds sitting in many investors’ portfolios were suddenly much less attractive because of their lower yields.

    The largest bond fund by assets, one from Vanguard that tracks the broad market, had lost 12.5% in 2022, as of Dec. 20. That’s by far its worst year since its inception in 1987.

    Historically bonds have held up better than stocks during downturns, offering some cushion for investors, but both tumbled in 2022.

    — Stan Choe

    ———

    HOUSING MARKET SLUMPS

    As 2022 began, the nation’s housing market was still running red hot.

    House hunters competed for the fewest homes for sale in more than two decades, fueling bidding wars that pushed prices sharply higher. The average rate on a 30-year mortgage was slightly above 3%, near historic lows.

    Then mortgage rates started to climb, spurred by expectations of higher interest rates as the Federal Reserve began raising its short-term lending rate in a bid to tame inflation. By October, the average rate on a 30-year home loan soared above 7%, a 20-year high.

    Higher mortgage rates combined with still-rising home prices make it difficult for many would-be buyers to afford a home. Sales of previously occupied U.S. homes saw their biggest sales slump in more than a decade.

    — Alex Veiga

    ———

    IS TESLA ON AUTOPILOT?

    You can’t blame Tesla shareholders for feeling jilted.

    CEO Elon Musk took over Twitter and appears consumed with turning around the social media company. With Musk’s focus diverted, Tesla shares lost more than half their value, their biggest-ever annual. And Tesla’s dominance of the market for electric vehicles is waning.

    Most of Musk’s wealth is tied up in Tesla stock, which started falling in April when he disclosed a stake in Twitter. The collapse in the stock price has bumped Musk into second place on Forbes’ list of the world’s wealthiest people, behind cosmetic magnate Bernard Arnault.

    After buying Twitter in October, Musk has cut half its staff and picked fights with public officials and others.

    — Tom Krisher

    For full coverage of Elon Musk, Twitter and Tesla, go to https://apnews.com/hub/twitter-inc

    ———

    CONSUMERS FEEL THE PINCH

    The highest inflation in four decades is hitting consumers right in their wallets.

    Households — especially at the lower end of the income spectrum — are likely depleting savings built up during the pandemic, with more pain to come should the economy tip into a recession. Credit card debt ballooned and rents rose in 2022, although there are signs housing costs will be coming down. While President Biden promised student borrowers relief of up to $20,000 this year, that debt cancellation policy is tied up in the courts.

    Wages went up, although not at the same pace as inflation. Aggressive rate hikes by the Federal Reserve have pushed up the cost of borrowing money. But while the average rate on a credit card rose to 16.3% in August from 14.5% at the start of the year, according to the government, the average rate for a savings account is still just 0.2%; it’s 0.9% for a one-year CD.

    — Cora Lewis

    For full coverage personal finance got to https://apnews.com/hub/financial-wellness and https://apnews.com/hub/personal-finance

    ——

    UKRAINE WAR IMPACT

    Russia’s invasion of Ukraine in February sent prices soaring for the commodities the world runs on: oil, natural gas, and wheat.

    European prices for natural gas rose to 17 times their prewar levels after Russia choked off most supplies over the war. The result was an energy crisis that pushed inflation to record levels and left governments and utilities scrambling to find alternative supplies of gas ahead of winter heating season.

    Global oil prices spiked as Western buyers shunned Moscow’s crude, sending Brent to over $120 per barrel in May. Europe banned most Russian oil imports in December and the Group of Seven democracies imposed a $60 per barrel price cap on Russian exports.

    Meanwhile record wheat prices spurred disastrous food inflation in poor countries.

    By year end, lower prices for oil, natural gas and electricity had provided a bit of relief for drivers and homeowners.

    To see full coverage of the Russia-Ukraine war, go to https://apnews.com/hub/russia-ukraine

    ———

    CHINA DITCHES ZERO COVID

    China’s economic growth and stock market slid in 2022 under pressure from pandemic controls and corporate debt, prompting the ruling Communist Party to ease off anti-disease restrictions and try to revive a struggling real estate industry.

    The world’s second-largest economy shrank by 2.6% in the three months ending in June compared with the previous quarter after Shanghai and other industrial centers shut down for up to two months to fight outbreaks.

    Forecasters say annual growth might fall below 3%, among the lowest in decades. To cut the economic drag, the ruling party ended testing for millions of people and stopped requiring supermarkets and other businesses to track the health of employees and customers. Beijing also tried to revive real estate, China’s biggest economic driver, by lending more to apartment buyers while trying to prevent a renewed rise in borrowing by developers.

    — Joe McDonald

    To see full coverage of developments in China, go to https://apnews.com/hub/china

    ———

    CRYPTO’S WILD RIDE

    The year began with bitcoin above $45,000 and the crypto industry making further inroads among politicians and mainstream financial institutions. As 2022 ends, bitcoin is below $17,000, the industry’s “savior” is under house arrest and Washington is fighting over how to regulate crypto.

    With the steady, steep decline of crypto prices in the background, the dominoes began to fall with the collapse in May of Terra, a so-called stablecoin. Investors lost tens of billions of dollars and a number of crypto companies faced financial ruin. In stepped Sam Bankman-Fried, the young founder of crypto exchange FTX, who bailed out crypto lender BlockFi and crypto firm Voyager, earning him comparisons to the original J.P. Morgan.

    Those plaudits evaporated when FTX unraveled in November. Questions about its financial strength prompted customers to request large withdrawals. Overwhelmed and, it turns out, underfunded, FTX filed Chapter 11 bankruptcy protection on Nov. 11. Bankman-Fried was arrested in the Bahamas and extradited to the U.S. to face criminal and civil charges related to the collapse of FTX.

    — Ken Sweet

    To see AP’s full coverage of the cryptocurrency industry, go to: https://apnews.com/hub/cryptocurrency

    ——

    THE STREAMING WARS

    Netflix, Warner Bros. Discovery and other big entertainment companies tumbled in 2022 as streaming services struggled amid increased competition and rising inflation stifled advertising spending.

    Streaming services had to contend with a return to normal for many people who had been stuck at home because of lockdowns or other restrictions during the height of the COVID-19 pandemic. The sheer number of streaming options also left companies in a fierce fight for viewers’ attention.

    Streaming giant Netflix lost about half of its value after a steep drop in viewers in the year’s first half. Disney felt the pinch from lower advertising revenue, but the diversified entertainment giant’s stock held up better than most competitors.

    Warner Bros. Discovery also struggled with advertising revenue, and it axed several films including “Batgirl” as it shifted strategy and looked to trim costs.

    — Damian Troise

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  • Global markets mixed, headed for annual loss

    Global markets mixed, headed for annual loss

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    BEIJING — Asian stocks rose Friday while Europe opened lower as most major markets headed for big annual losses following a year that was roiled by Russia’s invasion of Ukraine and interest rate hikes to cool surging inflation.

    Shanghai and Tokyo advanced. London and Frankfurt declined. U.S. futures were lower heading into Wall Street’s final trading day of 2022. Oil prices fell back.

    Wall Street’s benchmark S&P 500 index gained Thursday after the number of people applying for unemployment benefits rose only slightly last week despite interest rate hikes to cool inflation by slowing economic activity.

    “Considering the market news was sparse, the shift higher has the hallmarks of a dead cat bounce,” said Stephen Innes of SPI Asset Management in a report.

    In early trading, the FTSE in London lost 0.4% to 7,483.42. It is on track to become the only major market with a gain for 2022, rising about 1% for the year.

    Other markets are set for annual losses after Russia’s attack on Ukraine pushed up oil and wheat prices and the Federal Reserve and other global central banks hiked rates to slow economic activity and cool inflation that is at multi-decade highs. China’s shutdown of Shanghai and other cities to fight COVID-19 outbreaks disrupted manufacturing and shipping.

    The DAX in Frankfurt shed 0.6% to 13,996.57. It is headed for a 12% loss in 2022. The CAC-40 in Paris declined 0.5% to 6,539.21. It is down 9.5% for the year.

    On Wall Street, the S&P 500 future was off 0.4%. That for the Dow Jones Industrial Average declined 0.3%.

    On Thursday, the S&P 500 rose 1.7%. It will end the year down about 20%, which would be its biggest annual decline since 2008.

    The Dow gained 1% and the Nasdaq composite added 2.6%. Both are headed for annual losses.

    In Asia, the Shanghai Composite Index gained 0.5% to 3,089.25. The Chinese benchmark is on track to end 2022 down more than 14% after the world’s second-largest economy was depressed by anti-virus controls and a crackdown on corporate debt.

    Tokyo’s Nikkei 225 finished unchanged at 26,094.50. It is headed for an annual loss of almost 10%. The Hang Seng in Hong Kong added 0.2% to 19,781.41. It is off more than 14% this year.

    Sydney’s S&P-ASX 200 was 0.3% higher at 7,038.70. India’s Sensex opened up 0.3% at 61,133.88. New Zealand declined while Southeast Asian markets rose.

    South Korean markets were closed for a holiday. The country’s benchmark Kospi index is headed for a loss of more than 25% for the year.

    Investors worry central banks are willing to cause a recession if necessary.

    The Fed’s key lending rate stands at a range of 4.25% to 4.5% after seven increases this year. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

    In energy markets, benchmark U.S. crude fell 50 cents to $77.90 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents on Thursday to $78.40. Brent crude, used as the price basis for international oil trading, gave up 36 cents to $83.10 per barrel in London. It lost $1 the previous session to $82.26 a barrel.

    The dollar declined to 132.02 yen from Thursday’s 132.90 yen. The euro edged down to $1.0668 from $1.0677.

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  • Average mortgage rates rise after 6 weeks of declines

    Average mortgage rates rise after 6 weeks of declines

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    The average long-term U.S. mortgage rate rose this week after falling for six straight weeks, adding to the challenges potential homebuyers face amid rising home prices and a limited supply of available homes

    WASHINGTON — The average long-term U.S. mortgage rate rose this week after falling for six straight weeks, adding to the challenges potential homebuyers face amid higher home prices and a limited supply of available houses.

    Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate increased to 6.42% from 6.27% last week. That is more than double the year-ago average rate of 3.11%.

    The long-term rate reached 7.08% in late October and again in early November as the Federal Reserve has continued to crank up its key lending rate this year in an effort to cool the economy and tame inflation.

    The big increase in mortgage rates has torpedoed the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.

    While home prices are now dropping as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable and a much more daunting prospect for many people.

    George Ratiu, senior economist at realtor.com, calculates that the monthly payment for a median-priced home is now about $2,100, before taxes and insurance, up more than 60% from a year ago. The median is halfway between the highest and lowest figures.

    Sales of new homes are also falling. Ratiu expects mortgage rates will remain above 6% next year and sales to stay low.

    “All of these data are indicative of a market going through a major reset, which is the Fed’s goal,” he said.

    The Fed has hiked its benchmark interest rate seven times this year to a range of 4.25% to 4.5%, the highest in about 15 years. It has signaled it may raise them another three-quarters of a point next year.

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  • Applications for US unemployment aid rose slightly last week

    Applications for US unemployment aid rose slightly last week

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    WASHINGTON — The number of people seeking unemployment benefits rose only slightly last week with the labor market remaining strong despite the Federal Reserve’s efforts to cool the economy and hiring.

    Applications for unemployment aid for the week ending Dec. 24 climbed 9,000 to 225,000, the Labor Department reported Thursday. The four-week average of applications, which smooths out some of the week-to-week swings, slipped just 250 to 221,000.

    Unemployment benefit applications are a proxy for layoffs, and are being closely monitored by economists as the Fed has rapidly raised interest rates in an effort to slow job growth and inflation. Should the Fed’s rate hikes cause a recession, as many economists fear, a jump in layoffs and unemployment claims would be an early sign.

    So far, the level of jobless claims remains quite low, evidence that Americans are enjoying a high degree of job security. In the coming weeks, thousands of workers with temporary jobs during the winter holidays will lose work and apply for jobless aid. The government seeks to seasonally adjust the data to account for those job losses, but the adjustments are not always perfect and the layoff of temporary workers could distort the data.

    The Fed is seeking to slow job growth and the pace of wage increases as part of its efforts to battle inflation. The central bank has hiked rates seven times this year, which has made it more expensive for consumers to take out mortgage and auto loans, and raised borrowing rates for credit cards.

    So far, the interest rate increases have pushed mortgage rates above 6%, essentially double what they were before the Fed began tightening credit. Higher mortgage rates have hammered the housing market, with sales of existing homes falling for 10 straight months.

    Yet so far there has been only a limited impact on hiring. Employers added 263,000 jobs in November, a healthy gain, and the unemployment rate stayed at a low 3.7%.

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  • Asian shares extend losses after Wall Street decline

    Asian shares extend losses after Wall Street decline

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    BANGKOK — Shares slipped in Asia on Thursday after benchmarks fell more than 1% on Wall Street in the middle of a mostly quiet and holiday-shortened week.

    U.S. futures were mixed and oil prices declined.

    Investors are watching to see how China‘s relaxation of its stringent COVID-19 policies, and the outbreaks of infections that have followed, will affect business activity and travel.

    One concern is that the massive outbreaks could generate new, potentially vaccine resistant variants of the virus, “leading to knock-on virus surges across the globe, China’s reopening could still mark a positive step over the long run in light of past global attempts in bringing virus cases under control,” Yean Jun Rong of IG said in a commentary.

    The Hang Seng in Hong Kong shed 1.0% to 19,691.33, while the Shanghai Composite index was down 0.3% at 3,078.81.

    Tokyo’s Nikkei 225 index lost 0.9% to 26,093.67.

    The Kospi in Seoul sank 1.9% to 2,236.40 after the government reported South Korea’s industrial production fell 3.7% from a year earlier in November, worse than forecast and a bigger drop than the 1.2% decline in October. Retail sales were down 1.8% from the month before.

    Australia’s S&P/ASX 200 gave up 0.9% to 7,020.10. Bangkok’s SET index gained 0.3% and Mumbai’s Sensex was flat.

    The worst year since 2008 for the S&P 500 has been winding down with little in the way of data to drive trading. But later Thursday, the U.S. government was due to release jobless claims, a measure of employment that could provide insight into how the economy is faring as the Federal Reserve raises interest rates to quash inflation.

    The Fed has already raised its key interest rate seven times this year and is expected to continue raising rates in 2023. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers forecast that the rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

    On Wednesday, the S&P 500 fell 1.2%, with technology, energy and industrial stocks among the biggest weights on the benchmark index. It finished at 3,783.22.

    The Dow Jones Industrial Average dropped 1.1% to 32,875.71. The Nasdaq slid 1.4% to 10,213.29. The Russell 2000 gave up 1.6%, ending at 1,722.02.

    Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.88% from 3.85% Tuesday. The yield on the two-year Treasury fell to 4.34% from 4.38% late Tuesday.

    With two more days of trading left in 2022, the S&P 500 is headed for a roughly 20% drop for the year, even as profits and margins for companies in the index have hit record heights this year. The Dow is on pace for a 9.5% drop, while the Nasdaq is doing much worse, on pace to plunge 34.7%.

    Southwest Airlines slid 5.2% as the carrier grappled with the fallout after cancelling thousands of flight cancellations. The airline’s CEO said it could be next week before the flight schedule returns to normal. Shares in other airlines also fell. Delta Air Lines dropped 2.8% and United Airlines fell 2.4%.

    Tesla rose 3.3% as it stabilized from steep losses it suffered after reports Tuesday that it temporarily suspended production at a factory in Shanghai.

    U.S. crude oil prices settled 0.7% lower and natural gas prices plunged 10.8%. That hurt energy stocks. Exxon Mobil fell 1.6%.

    Early Thursday, U.S. benchmark crude was down 54 cents at $78.42 per barrel in electronic trading on the New York Mercantile Exchange.

    Brent crude, the pricing basis for international trading, gave up 57 cents to $83.42 per barrel in London.

    The U.S. dollar fell to 133.77 Japanese yen from 134.39 yen late Wednesday. The euro rose to $1.0617 from $1.0613.

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  • Shares gain in Asia after China relaxes more COVID rules

    Shares gain in Asia after China relaxes more COVID rules

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    BANGKOK — Shares advanced Tuesday in Asia after China announced it would relax more of its pandemic restrictions despite widespread outbreaks of COVID-19 that are straining its medical systems and disrupting business.

    China’s National Health Commission said Monday that passengers arriving from abroad will no longer have to observe a quarantine, starting Jan. 8. They will still need a negative virus test within 48 hours of their departure and to wear masks on their flights.

    But it was the latest step toward dropping once-strict virus-control measures that have severely limited travel to and from the world’s No. 2 economy.

    China has joined other countries in treating cases instead of trying to stamp out infections, dropping or easing rules on testing, quarantines and movement as it tries to reverse an economic slump. But the shift has flooded hospitals with feverish, wheezing patients, and authorities are going door to door and paying people older than 60 to get vaccinated against COVID-19.

    The Shanghai Composite index jumped 0.8% to 3,089.39. Hong Kong’s markets were closed for a holiday, as were those in Australia.

    Tokyo’s Nikkei 225 added 0.3% to 26,476.27 and the Kospi in Seoul also gained 0.3%, to 2,323.52.

    In Bangkok, the SET index rose 0.6%, while the Sensex in Mumbai surged 1.2%.

    Markets in the U.S. and Europe were closed Monday for holidays and Asian markets were mostly higher.

    On Friday, the S&P 500 closed 0.6% higher. It is down 19.3% for the year, just on the cusp of a bear market.

    The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq edged 0.2% higher. The Russell 2000 index picked up 0.4%.

    Solid U.S. consumer spending and a strong jobs market have kept the economy growing, but they also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to crush inflation.

    After last week’s updates, the last big reports of the year, investors will be watching for corporate earnings that may provide insights into how the economy is faring.

    The pace of price increases has eased, but the Fed has said it will keep raising interest rates to tame inflation. Its key overnight rate is at its highest level in 15 years, after beginning the year at a record low of near zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast it will reach a range of 5% to 5.25% by the end of 2023 and not be cut before 2024.

    The higher rates bring the risk the economy could stall and slip into a recession in 2023. They also have been weighing heavily on prices for stocks and other investments.

    In other trading Tuesday, U.S. benchmark crude oil picked up 31 cents to $79.87 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long Christmas weekend holiday.

    Brent crude oil, the pricing basis for international trading, also added 31 cents to $84.81 per barrel.

    In currency dealings, the U.S. dollar rose to 132.96 Japanese yen from 132.89 yen late Monday. The euro rose to $1.0647 from $1.0638.

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  • Shares gain in Asia after China relaxes more COVID rules

    Shares gain in Asia after China relaxes more COVID rules

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    BANGKOK — Shares advanced Tuesday in Asia after China announced it would relax more of its pandemic restrictions despite widespread outbreaks of COVID-19 that are straining its medical systems and disrupting business.

    China’s National Health Commission said Monday that passengers arriving from abroad will no longer have to observe a quarantine, starting Jan. 8. They will still need a negative virus test within 48 hours of their departure and to wear masks on their flights.

    But it was the latest step toward dropping once-strict virus-control measures that have severely limited travel to and from the world’s No. 2 economy.

    China has joined other countries in treating cases instead of trying to stamp out infections, dropping or easing rules on testing, quarantines and movement as it tries to reverse an economic slump. But the shift has flooded hospitals with feverish, wheezing patients, and authorities are going door to door and paying people older than 60 to get vaccinated against COVID-19.

    The Shanghai Composite index jumped 0.8% to 3,089.39. Hong Kong’s markets were closed for a holiday, as were those in Australia.

    Tokyo’s Nikkei 225 added 0.3% to 26,476.27 and the Kospi in Seoul also gained 0.3%, to 2,323.52.

    In Bangkok, the SET index rose 0.6%, while the Sensex in Mumbai surged 1.2%.

    Markets in the U.S. and Europe were closed Monday for holidays and Asian markets were mostly higher.

    On Friday, the S&P 500 closed 0.6% higher. It is down 19.3% for the year, just on the cusp of a bear market.

    The Dow Jones Industrial Average rose 0.5%, while the tech-heavy Nasdaq edged 0.2% higher. The Russell 2000 index picked up 0.4%.

    Solid U.S. consumer spending and a strong jobs market have kept the economy growing, but they also raise the risk that the Federal Reserve will need to persist in raising interest rates and keeping them high to crush inflation.

    After last week’s updates, the last big reports of the year, investors will be watching for corporate earnings that may provide insights into how the economy is faring.

    The pace of price increases has eased, but the Fed has said it will keep raising interest rates to tame inflation. Its key overnight rate is at its highest level in 15 years, after beginning the year at a record low of near zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast it will reach a range of 5% to 5.25% by the end of 2023 and not be cut before 2024.

    The higher rates bring the risk the economy could stall and slip into a recession in 2023. They also have been weighing heavily on prices for stocks and other investments.

    In other trading Tuesday, U.S. benchmark crude oil picked up 31 cents to $79.87 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.07 to $79.56 before markets closed for the long Christmas weekend holiday.

    Brent crude oil, the pricing basis for international trading, also added 31 cents to $84.81 per barrel.

    In currency dealings, the U.S. dollar rose to 132.96 Japanese yen from 132.89 yen late Monday. The euro rose to $1.0647 from $1.0638.

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  • Asian shares higher in thin holiday trading

    Asian shares higher in thin holiday trading

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    BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

    Tokyo’s Nikkei 225 index gained 0.6% to 26,393.32 and the Kospi in Seoul added 0.2% to 2,318.54. The Shanghai Composite index rose 0.5% to 3,061.93 and the SET in Bangkok added 0.6%.

    Bank of Japan Gov. Haruhiko Kuroda indicated in a widely watched speech Monday that the central bank does not intend to alter its longstanding policy of monetary easing to cope with pressures from inflation on the world’s third-largest economy.

    Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

    A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

    But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

    Kuroda told the Keidanren, the country’s most powerful business group, that with economies facing likely downward pressure, and with Japan’s economy not fully recovered from the impacts of the pandemic, the BOJ “deems it necessary to conduct monetary easing and thereby firmly support the economy. …”

    On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

    The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

    Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

    Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

    Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

    The government reported Friday that a key measure of inflation is continuing to slow, though the inflation gauge in the consumer spending report was still far higher than anyone wants to see. Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

    Last week’s reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

    The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

    Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

    The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

    In currency dealings, the U.S. dollar slipped to 132.62 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0629 from $1.0614.

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  • Asian shares higher in thin holiday trading

    Asian shares higher in thin holiday trading

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    BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

    Tokyo’s Nikkei 225 index gained 0.5% to 26,367.40 and the Kospi in Seoul added 0.2% to 2,317.48. The Shanghai Composite index surged 0.7% to 3,067.54 and the SET in Bangkok added 0.3%.

    Traders were awaiting a speech by the governor of Japan‘s central bank Monday for hints into whether the Bank of Japan might further adjust its longstanding ultra-lax monetary policy to cope with pressures from inflation.

    Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

    A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

    But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

    On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

    The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

    Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

    Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

    Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

    The government reported Friday that a key measure of inflation is continuing to slow, though it’s still far higher than anyone wants to see. The Federal Reserve monitors the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index.

    Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

    A separate report from the University of Michigan indicating U.S. households are lowering their forecasts for upcoming inflation. That could help avoid a scenario the Federal Reserve has said often it’s desperate to prevent: a vicious cycle where shoppers rush to make purchases in advance of expected price rises, which would only worsen inflation.

    The latest round of reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

    The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

    Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

    The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

    In currency dealings, the U.S. dollar slipped to 132.53 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0628 from $1.0614.

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  • An inflation measure watched by the Fed eases to 5.5%

    An inflation measure watched by the Fed eases to 5.5%

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    WASHINGTON — A measure of inflation closely watched by the Federal Reserve slowed last month, another sign that a long surge in consumer prices seems to be easing.

    Friday’s report from the Commerce Department showed that prices rose 5.5% in November from a year earlier, down from a revised 6.1% increase in October and the smallest gain since October 2021. Excluding volatile food and energy prices, so-called core inflation was up 4.7% over the previous year. That was also the smallest increase since October 2021.

    On a month-to-month basis, prices rose 0.1% from October to November after rising 0.4% the previous month. Core prices rose 0.2%.

    Inflation, which began surging a year and a half ago as the economy bounced back from 2020’s coronavirus recession, still remains well above the 2% year-over-year growth the Fed wants to see.

    The central bank has raised its benchmark interest rate seven times since March in an attempt to bring consumer prices under control.

    Higher prices and borrowing costs may be taking a toll on American consumers. Their spending rose just 0.1% from October to November and didn’t rise at all after adjusting for higher prices.

    “We expect a deceleration in household spending as the Fed hikes rates further in 2023,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.

    Americans’ after-tax income, however, rose 0.3% in November even after accounting for inflation.

    The Fed is believed to monitor the Commerce Department’s inflation gauge that was issued Friday, called the personal consumption expenditures price index, even more closely than it does the Labor Department’s better-known consumer price index. CPI rose 7.1% in November from 12 months earlier, down from June’s 9.1% year-over-year increase, which had been the biggest such jump in four decades.

    The PCE index tends to show a lower inflation rate than CPI. In part, that is because rents, which have soared, carry double the weight in the CPI that they do in the PCE.

    The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture, for example, when consumers switch from pricey national brands to cheaper store brands.

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  • An inflation measure watched by the Fed eases to 5.5%

    An inflation measure watched by the Fed eases to 5.5%

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    WASHINGTON — A measure of inflation closely watched by the Federal Reserve slowed last month, another sign that a long surge in consumer prices seems to be easing.

    Friday’s report from the Commerce Department showed that prices rose 5.5% in November from a year earlier, down from a revised 6.1% increase in October and the smallest gain since October 2021. Excluding volatile food and energy prices, so-called core inflation was up 4.7% over the previous year. That was also the smallest increase since October 2021.

    On a month-to-month basis, prices rose 0.1% from October to November after rising 0.4% the previous month. Core prices rose 0.2%.

    Inflation, which began surging a year and a half ago as the economy bounced back from 2020’s coronavirus recession, still remains well above the 2% year-over-year growth the Fed wants to see.

    The central bank has raised its benchmark interest rate seven times since March in an attempt to bring consumer prices under control.

    Higher prices and borrowing costs may be taking a toll on American consumers. Their spending rose just 0.1% from October to November and didn’t rise at all after adjusting for higher prices.

    “We expect a deceleration in household spending as the Fed hikes rates further in 2023,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note.

    Americans’ after-tax income, however, rose 0.3% in November even after accounting for inflation.

    The Fed is believed to monitor the Commerce Department’s inflation gauge that was issued Friday, called the personal consumption expenditures price index, even more closely than it does the Labor Department’s better-known consumer price index. CPI rose 7.1% in November from 12 months earlier, down from June’s 9.1% year-over-year increase, which had been the biggest such jump in four decades.

    The PCE index tends to show a lower inflation rate than CPI. In part, that is because rents, which have soared, carry double the weight in the CPI that they do in the PCE.

    The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture, for example, when consumers switch from pricey national brands to cheaper store brands.

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